Important Considerations When Choosing a Medical Aid Fund

How much can you afford to spend? When deciding to join a medical aid fund, first ask yourself what you can afford to spend on the monthly premiums. If you need to see a dentist, you’ll want a policy that pays for it. If you need an operation you’ll want to be booked into a private ward in the best hospital in Namibia. But are you willing to spend N$10,000 per month for such a benefit privilege? If your budget is between N$1,000 and N$1,500 a month, it is always best to choose a benefits option that is affordable. Knowing how much you can spend reduces most of the work.

What medical cover do you need? Medical aid cover is broken down into two parts: In-hospital expenses (which happen while admitted into a hospital) and Out-of-hospital-expenses (doctors, dentists and over the counter medication). Without knowing what you need from medical aid cover, you will not know which medical aid benefit option to choose. Therefore you will need to ask yourself the following questions: How much did you spend on day-to-day medical expenses during the past year? How much did you spend on visits to the doctor – N$3,000? Hospitalisation – N$0? Dentistry – N$5,000? Medicine – N$2,000? If you already belong to a medical aid fund, it’s even easier. Just ask them to send you a copy of your claims history for the last twelve months; Which of those expenses where once off and which won’t come up again soon (like maternity)? Which are likely to come up again and again (Like the flu)? Twice a year you should see the oral hygienist, so this needs to be included in the budget. Can you pay on your own out-of-hospital expenses? If yes, then look at medical aid fund options that just covers your hospital requirements; If you don’t have enough money, then consider a medical aid benefit option with a savings account (MSA) attached to it. More information can be found by reading the out-of-hospital cover section of this article. If you find that you do not use the medical aid as much and is unlikely to claim unless you need a serious operation, then all you need is a simple hospital benefit option. If you run out of savings by March, then you need a plan with much higher savings

a 20 year old who hasn’t seen a doctor since the day his mother gave birth to him needs something quite different from the 50 year old with high blood pressure and diabetes. The younger you are, generally, the healthier you are. That means you may need less coverage. The older and sicker you are, the more medical aid cover you need. Membership and reserve level

Accumulated funds (reserves) is the net asset value of medical aid funds, and must be maintained at the minimum prudential required reserve level (“reserves level”), i.e. 25% of gross contributions. It is very important to look at the medical aid fund’s membership status and reserve level. Some funds have a big membership base, but their reserve level is far below or close to the prudential minimum required level of 25%. This means the fund is likely to have a bigger premium increase at the end of the year. Reserve levels may drop annually, should a fund have a bad claims experience that year. Other funds’ membership might be small, but the reserve level is high, which means enough funds are available and premium increases at the end of the year can be expected to be lower than the average in the market.